Items of Interest:
Conn Carroll / The Foundry:
True Cost of Stimulus: $3.27 Trillion — All of the major news outlets are reporting that the stimulus bill voted out of conference committee last night has a meager $789 billion price tag. This number is pure fantasy. No one believes that the increased funding for programs the left loves …
discussion:Will Franklin / WILLisms.com: Trivia Tidbit of the Day: Part 532 — Bailout 2009 Visual Depiction.Hans Bader / OpenMarket.org: Stimulus Guts Welfare Reform, Is DeceptiveAllahpundit / Hot Air: Stimulusmania: Rasmussen shows seven-point surge in support, tooDan Spencer / RedState: Obama's bailout to cost $3.27 trillionKevin D. / Dean's World: The True Cost Of Stimulus: $3.27 Trillion
discussion:Kathy / Comments from Left Field: Scaring People in a CatastropheJennifer Rubin / Commentary: You Guys Are Freaking Us OutMustang Bobby / The Reaction: Weak Willed — George F. Will can be a brilliant writer …Steve Benen / Washington Monthly: GEORGE WILL'S ODD LOGIC.... I'm not surprised George Will disapproves …The Atlantic Politics Channel: The Logic Of George WillTHE ASTUTE BLOGGERS: LEXICON CHECK: “FIRST 100 DAYS”
Rewarding Failure --
Just like you I am now going to stop mowing my lawn and paying my mortgage. The government is paying for yours so why not mine? It is a slippery slope rewarding those that fail, so failure it is.
Greenspan Says He Was Mystified by Subprime Market -- Alan Greenspan, the former chairman of the Federal Reserve, told CNBC in a documentary to be shown Thursday night that he did not fully understand the scope of the subprime mortgage market until well into 2005 and could not make sense of the complex derivative products created out of mortgages...
Mr. Greenspan also lays the blame on the ratings agencies and the people that trusted their judgment for the proliferation of the mortgage derivatives that were a major part of the current financial crisis.
“What we have created in this world is an aura around the credit rating agencies about certification from them is the Good Housekeeping seal of approval, ” Mr. Greenspan said. “I will tell you the record of a lot of the forecasters of ratings have not been distinguished. They never were.” ...
discussion:Echidne / ECHIDNE OF THE SNAKES: Where The Buck Does Not StopRussell Roberts / Cafe Hayek: Not from the OnionTom Maguire / JustOneMinute: Greenspan Explains — Alan Greenspan explains that the subprime …John Cole / Balloon Juice: No One Could Have Predicted (Subprime Edition)Pat G. / Wonk Room: Greenspan: I Was ‘Mystified’ By The Subprime Mortgage MarketGreg Ransom / Taking Hayek Seriously: bust: Alan Greenspan, Can You Say “Artificial Boom & Inevitable Bust”?Barry Ritholtz / The Big Picture: Greenspan: Blame the Rating Agencies
Large Banks on the Edge of Insolvency -- Some of the nation’s large banks, according to economists and other finance experts, are like dead men walking.
A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, they say. The banks, in their view, are insolvent...
Nouriel Roubini / Forbes:
We Must Nationalize Insolvent Banks -- ... total losses on loans made by U.S. financial firms and the fall in the market value of the assets they are holding will be, at their peak, about $3.6 trillion. The U.S. banks and broker-dealers are exposed to half of this much, or $1.8 trillion; the rest is borne by other financial institutions in the U.S. and abroad.
The capital backing the banks' assets was just $1.4 trillion (last fall), leaving the U.S. banking system some $400 billion in the hole, or close to zero even after the government and private-sector recapitalization of such banks. Thus, another $1.4 trillion will be needed to bring back the capital of banks to the level it had before the crisis, and such massive additional recapitalization is needed to resolve the credit crunch and restore lending to the private sector....
John Gapper / Financial Times: Heaven Help America's Banking System
Banking Solution: Amortization / Regulatory Forbearance?
Vinny Catalano / Minyanville:
Pandit's Amortization Trial Balloon: Can It Float US Out of Crisis? -- At yesterday’s congressional hearing, Citigroup’s CEO Vikram Pandit floated what looked to me like a trial balloon that may turn out to be the path out of the credit-induced economic crisis and, in the process, put to bed the doomsayers' chatter about insolvent banks....
Mark-to-market, the disastrous decision that turned a bad recession into a credit -- and now economic -- crisis, needs to be dealt with. Since the forces aligned against its elimination and/or modification are too formidable for the current and past government officials to overcome, getting around the insane rules is the next best thing. Amortizing the losses for illiquid assets with the prospects of capturing any price recovery would make infinitely more sense than continuing the current regime of efficient-market fantasy thought...
Bill Feingold / Minyanville:
Off the Mark: Mark-to-Market Accounting -- yesterday the splendid Holman W. Jenkins Jr. wrote something really good. Mr. Jenkins, who's generally fairly conservative, even benchmarked to the Journal, put forth an exceedingly fair-minded case for “regulatory forbearance,” which is a euphemism for allowing banks to stop marking to market, at least for a while... Also, yesterday, Andy Kessler discussed the idea of recapitalizing banks, injecting new equity and distributing the shares to taxpayers based on prior years’ IRS bills...
Announcing the Reason Personal Stimulus Generator! - You May Qualify For Up To $350 Billion!
As the government gets set to spend nearly $800 billion to stimulate the economy, make sure to get your fair share of the plunder by participating in Reason's Personal Stimulus Generator™...
Keepin' It Real Estate: How Good is Zillow? -- Americans finally get it: Home prices are falling.
This may seem like a preposterous statement, what with the entire global financial system in disarray after the collapse of the US housing market, but we Americans are stubbornly optimistic people, content to ignore calamity as long as we possibly can.
A study released this week by Zillow, a real estate information website...
Imagine Blankfein Questioning Barney Frank -- The chief executive officers of Wall Street’s too-big-to-fail banks traipsed up to Capitol Hill yesterday to submit to questioning from Barney Frank and the House Financial Services Committee he heads.
It was the latest installment in a series of show trials featuring the likes of Major League baseball, the Detroit auto industry, Big Oil and Bad Tobacco.
Not that Congress is outside its jurisdiction in inquiring after the taxpayer money it has doled out. (If only lawmakers were as vigilant about the rest of their spending.) When our elected representatives are out for blood, a legitimate form of inquiry quickly degenerates into finger-pointing and grand- standing for the folks back home...
Laid-Off Foreigners Flee as Dubai Spirals Down -- Sofia, a 34-year-old Frenchwoman, moved here a year ago to take a job in advertising, so confident about Dubai’s fast-growing economy that she bought an apartment for almost $300,000 with a 15-year mortgage.
Now, like many of the foreign workers who make up 90 percent of the population here, she has been laid off and faces the prospect of being forced to leave this Persian Gulf city — or worse.
“I’m really scared of what could happen, because I bought property here,” said Sofia, who asked that her last name be withheld because she is still hunting for a new job. “If I can’t pay it off, I was told I could end up in debtors’ prison.” ...
discussion:Steve M. / No More Mister Nice Blog: RIGHT-WINGERS: WRONG ABOUT EVERYTHING?Justin Fox / The Curious Capitalist: Does Dubai have what it takes to stick to capitalism?Christy Hardin Smith: Batten Down The Economic Hatches
Pioneer Sees Wider Annual Loss, Will Cut 10,000 Jobs -- Pioneer Corp. will cut 10,000 jobs and close its television operations as the slump in global electronics sales forced the company to widen its annual loss forecast to a record 130 billion yen ($1.44 billion).
Pioneer said on May 13 it will stop making its own plasma panels by March to get out of money-losing flat-screen TV production. It ended output at two of its three plants in Japan last year and will halt operations at the remaining factory this month.
The withdrawal ends more than 25 years of TV manufacturing at Pioneer which shifted its focus from cathode-ray tube sets to developing plasma-screen models in 1991...
- Escaping the American Dust Bowl - Nicholas Kristof, New York Times
- Capitalism Needs Sound Money - Judy Shelton, Wall Street Journal
- The Financial Instability Plan - Diana Furchtgott-Roth, RealClearMarkets
- The Point of Stimulus Is to Spend Money - Jonathan Chait, New Republic
- Sorting Through The Economic Stimulus Breaks - Dale/Mincer, WSJ
- Coming Soon--Capitalism 3.0 - Dani Rodrik, Project Syndicate
- Economy Will Revive on Government's Back - Vad Yazvinski, MSN Money
- Proposals Concerning Current Financial Crisis - Harry Markowitz, CFA
- The New Depression Is Just Starting - Martin Jacques, New Statesman
- The Truth about Stimulus and the Depression - Jia Lynn Yang, Fortune
- Who Belongs To The ''Investor Class''? - John Zogby, Forbes
- Let's Have No Tough Love for Wall Street - Robert Scheer, The Nation
- Geithner's Plan Must Be Implemented Now - David Weidner, MarketWatch
- Geithner Offers Paralysis, Not Solutions - John Tamny, RealClearMarkets
- The Silver Lining to the Geithner Selloff - Michael Kahn, Barron's
- Brief Notes on the Geithner Financial Rescue Plan - Brad DeLong
- 4 Myths About the Obama-Geithner Bailout Plan - Flow Chart
- It's Too Early to Count Out the Oracle of Omaha - D. MacDougall, TheStreet
- Warren Buffett Is Just as Much To Blame as Anyone Else - Daily Beast
- A Decade of Gloomy Equity Returns - Tom Stevenson, Daily Telegraph
- The Future of Wall Street - Todd Harrison, Minyanville
- Really, How Bad Is the Economy? - Alfred Tella, Washington Times
- Wealth Does Not Pass Three Generations - Global Econ Trend Analysis